OBJECTIVES: There has been substantial interest in a Medicare drug benefit program. Little attention has focused on ensuring improved access to medication monitoring for Medicare beneficiaries. Using a societal perspective, we evaluated the impact pharmacists could have on inappropriate prescribing, patient compliance and medication-related morbidity and mortality within a Medicare Drug Benefits program. METHODS: To the extent possible, the cost-effectiveness modeling followed the methodology guidelines of the US Public Health Service Task Force on Cost Effectiveness Analysis. Data sources and model parameters were identified by conducting a comprehensive Medline search for relevant literature. RESULTS: In the base case, a pharmaceutical care benefit in the elderly population would cost $6312 (year 2000 prices) per life year saved-highly cost-effective. Aside from the number of deaths that are medication-related, no individual variations in parameters raised the cost-effectiveness ratio above $10,982 per life year saved. CONCLUSION: Despite data limitations, pharmaceutical care appears to be a highly cost effective augmentation to a Medicare drug benefit program. This result is insensitive to model parameter changes. This model is conservative in that it does not include ongoing benefits from medication monitoring, or increased elderly drug utilization and polypharmacy as the Medicare drug program is phased in.